City Corporate & Business Plan - Municipal
City Corporate & Business Plan - Municipal
City Corporate & Business Plan - Municipal
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Chapter ñ 11 Final Report: Ambur <strong>Municipal</strong>ity<br />
Defaulting in meeting dead lines in<br />
construction and commissioning<br />
Ensuring service delivery<br />
- 112 -<br />
Linking contracting services to key performance<br />
indicators and in turn to the payment schedule<br />
Independent commissioning tester to ensure delivery<br />
O&M risk<br />
of the required performance.<br />
Increase in predicted operating costs Address future service delivery demands also<br />
Impact of design flaws & defective<br />
construction, deterioration of<br />
performance standards<br />
Technologically outmoded practices<br />
Inherent defects of the system<br />
Defaults from designer, builder and<br />
operators<br />
Funding uncertainties<br />
Cost escalation<br />
Delays in financial closure of the project<br />
General economic down turn<br />
Changes in Government policies,<br />
Shift in industry focus<br />
Operating guarantees/performance bonds to ensure<br />
service continuity and compensation for default<br />
Inbuilt options for upgrading technology as the<br />
contract term proceeds<br />
Escrow mechanisms to ensure protected cash flows<br />
and enforce during service/operational default<br />
Financial risks<br />
Termination rights in case of insufficient<br />
delivery/break down in service provision<br />
Ensuring project structure, in-built contractual<br />
provisions and foreseeing risks make the project<br />
bankable, addressing lender related issues.<br />
Mitigate risks arising from inflation, interest rates,<br />
foreign exchange rates etc.<br />
Avoid looking for the lowest cost bid- base selection<br />
upon financially sound structure and business plan<br />
Market risks<br />
Quantify demand, providing demand related<br />
information at the bid stage<br />
Initiate feasibility studies, demand forecasting,<br />
sensitivity analysis.<br />
Change in target-market competition Incentives to stimulate end-users<br />
Floods, Cyclones, Earth quakes, Tsunami<br />
Insurance coverage<br />
Risks from Natural disasters<br />
Minimize impacts through appropriate insurances to<br />
transfer risk to insurer<br />
Regularly review insurance policies to ensure<br />
effective and adequate coverage<br />
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